Mutual fund exposure to software stocks hits all-time high in August

Mutual fund managers continued to maintain bullish stance on software companies, as they raised their total allocation in the sector to an all time-high of over Rs 40,500 crore in August due to depreciation in rupee.

Mutual fund managers continued to maintain bullish stance on software companies, as they raised their total allocation in the sector to an all time-high of over Rs 40,500 crore in August due to depreciation in rupee.(Thinkstock)

Mutual fund managers continued to maintain bullish stance on software companies, as they raised their total allocation in the sector to an all time-high of over Rs 40,500 crore in August due to depreciation in rupee.

In comparison, equity fund managers deployment in software stocks stood at Rs 29,668 crore during August last year.

Industry experts said that fund managers raised their allocation to software stocks due to declining rupee against the US dollar.

Like exporters, IT companies earn majority of their revenue in dollars. Depreciating rupee means exporters get more rupee per US dollar.

As per the data available with Securities and Exchange Board of India (Sebi), overall deployment of equity funds in software stocks stood at Rs 40,602 crore in August compared with Rs 38,404 crore in the previous month.

Besides, exposure to software stocks was at 10.27 per cent in August against 9.40 per cent in the preceding month.

Furthermore, IT was the second-most preferred sector with fund mangers after banks.

However, fund managers have reduced their exposure in traditional investment sectors like banking stocks. Deployment of equity funds in banking stocks dropped to Rs 81,634 crore from Rs 85,329 crore during the period under review.

Among others, MFs have an exposure of Rs 33,170 crore in pharmaceuticals, followed by auto (Rs 27,912 crore) and finance (Rs 23,015 crore).

Indian rupee fell by Rs 2.35 during the period under review. The domestic unit is trading at 66.37 against dollar.

The BSE IT index grew 1 per cent per cent last month, while the BSE Sensex crashed by 6.5 per cent.

MFs are investment vehicles made up of a pool of funds collected from a large number of investors and invest in stocks, bonds and money market instruments, among others.